Groupon plans to raise up to $950m

By Richard Waters in San Francisco

Groupon, the online coupon company that was in talks over a sale to Google for up to $6bn this month, has revealed a plan to raise up to $950m, in what could be the biggest capital raising by an internet company since Google went public more than six years ago.

If the two-year-old company were to follow through on the plan, the extra cash would lift the total amount it has raised to more than $1.1bn and give it the firepower to continue a headlong expansion that made it one of the most talked about internet phenomena of 2010.

IN Technology

Groupon issues discount coupons online on behalf of local merchants looking to attract customers, and keeps half of any money raised from the campaigns. That high-margin business model has boosted its revenues to an annual rate of $2bn, according to some accounts, and drawn the attention of Google, which has been looking for ways to expand in the underserved market for online promotions for local merchants.

Since negotiations over an acquisition collapsed, reports have been rife that Groupon has returned to trying to raise fresh capital to stay independent. It last raised $135m in April, in a round of fundraising led by Digital Sky Technologies, the Russian investment firm that has also been a prominent investor in Facebook and other fast-growing Silicon Valley groups.

Groupon disclosed its latest intention to raise money in a filing with regulators in Delaware, the state where it is legally incorporated, on December 17, two weeks after talks with Google fell through.

The group’s new statement of incorporation, which was first disclosed by VC Experts, a venture capital information firm, says Groupon would issue nearly 30.1m of a new series of preference stock, priced at $31.59 a share. The stock would be priced slightly below the level of the last round sold by Groupon in April, though the rights attached to the shares would be different.